Sorry Cheapskates, But HBO Doesn’t Want Your Money

Perhaps you’ve seen TakeMyMoneyHBO.com, a website/Twitter campaign trying to convince HBO to offer direct subscriptions to HBO GO, its excellent streaming TV service. (Today — and for the foreseeable future — you need a cable or satellite subscription to access HBO GO, which angers the cord cutters.)

It’s a neat idea, but it’s not likely to cause any quick changes in HBO’s plans.

When you consider HBO parent Time Warner’s relationships with Comcast, DirecTV, Verizon, etc., it’s not just HBO GO at stake, it’s the entire company. HBO is part of Time Warner’s “Networks” segment, which also includes Turner Broadcasting. This business generated $3.6 billion in revenue in Q1 — half of the whole company. And its $1.2 billion in Q1 operating income represented 89% of Time Warner’s total. Most of that money comes from subscription fees and advertising viewed by cable and satellite customers. Time Warner is not going to jeopardize that because some people on the Internet think it should.

It turns out, via TechCrunch, that people say they are willing to spend around $12 per month, on average, for direct access to HBO GO. That itself is not going to turn any heads at Time Warner. (I’m paying something like $17/month for HBO right now, through Time Warner Cable.) It’s just not enough — on either a per-subscriber or cumulative basis — to drive HBO away from its lucrative, long-term relationships with cable companies. If you could come up with $1 billion a month, maybe they’d talk. But $12 per sub? Nope.

Time Warner CEO Jeff Bewkes has long been one of the biggest voices behind “TV Everywhere”, the concept of verifying your cable subscription to stream video via services like HBO GO, the WatchESPN app, NBC’s forthcoming Olympics coverage, etc. Today, years later, TV Everywhere is finally starting to get established. By changing strategies now, Bewkes would be going against everything he’s talked up for years, just as it’s starting to work. Not likely.

Even if HBO wanted to offer direct-to-consumer subscriptions, there isn’t currently a payments and TV distribution service to build on top of, that’s popular and easy enough, with the right economics for content owners. Roku? Boxee? iOS + AirPlay? Samsung Smart TV? Xbox? Please. Compared to cable, these platforms are less popular, often harder to use, more fragmented, and have complicated or unfavorable billing systems. Maybe this will change as Apple, Microsoft, and Google go deeper into the living room. But right now, cable is still the safest bet.

This isn’t to say that HBO and Time Warner shouldn’t study or consider the idea of selling subscriptions direct to consumers. But do you really expect one of the biggest cable giants to lead the attack on cable — with no popular, promising alternatives?

This, of course, opens HBO to potential disruption by the likes of Netflix, YouTube, etc. And piracy, yes. So, studying the TV industry’s evolution and reacting when it’s time will be crucial for networks like HBO. (Many will inevitably react too slow, and will die. That’s why Netflix went nuts with that whole Qwikster thing, remember?) But Time Warner simply has too much invested into the cable industry — which is still very strong — to flip today.

At this point, it would still probably be more lucrative for HBO to squeeze a little more out of the Comcasts of the world than to lead the charge against them.